A Supply Chain for the Next Normal
The fluctuating economy over the past year impacted how companies across industries responded in a pinch. Now that crisis responses have passed and the pandemic settled into a new normal, many companies are looking for ways to adapt their long-term supply chain strategy for the unexpected.
Vulnerabilities that were exposed during the initial days of the pandemic spurred short-term fixes, such as turning stores into temporary warehouses or pivoting entire workforces to work-from-home. Now that these market changes have become a long-term shift, however, companies are looking to make longer-term investments into the next normal for their logistics operations.
One particular vulnerability the pandemic exposed was the inability to deliver on heightened consumer expectations. Shippers are looking for ways to position products closer—and therefore deliver faster—to the consumer.
Some companies had to pivot their supply chains completely, focusing on home delivery rather than traditional business-to-business commercial endpoints. This was particularly true for goods such as exercise equipment, which shifted away from gyms.
Home delivery and final mile didn't make brick-and-mortar stores obsolete, but suddenly, with the pandemic, many needed to transform their stores into fulfillment centers that could distribute products to consumers at home. After a year of operating in this model, many are considering new approaches to network design that allow them to keep products closer to consumers for the long term.
For example, many companies are reevaluating their distribution strategy, which may include shifting manufacturing facilities closer to consumers and distribution centers. Several are designing distribution center models that keep products on shelves in a quicker and more efficient way and leveraging micro-fulfillment strategies to satisfy that demand.
Meeting Final-Mile Expectations
In addition to changes in supply chain structure, many shippers are expanding their final-mile capabilities to meet the expectations of on-time consumer-friendly delivery. To compete with Amazon Prime, on-time delivery has become a priority like never before and capabilities such as in-home delivery and set up have increased in popularity. As a long-term response to months-long lockdowns extending into 2021, many companies are investing in additional final-mile capabilities to get their products to consumer homes and deliver a differentiated customer experience.
This became increasingly important as parcel carriers struggle to integrate bulky items like furniture pieces into their networks. Early in the pandemic, shipping through popular parcel carriers was a way to get products to consumers quickly, but it became apparent this was not a viable long-term strategy.
As a result, companies turned to logistics partners that could seamlessly integrate their networks with carriers who could take the package directly to consumers and provide options like doorstep delivery and home installations.
Network design and expanding final-mile capabilities are just a few ways companies across a variety of B2B and B2C industries are shifting their priorities as the pandemic extends into 2021. Uncertainty has become the new normal and several vulnerabilities were exposed after short-term solutions dissipated.
The companies that develop long-term logistics solutions—enabled by technology and data insights to adjust to consumer demand and pandemic uncertainty—are the ones positioned for growth in the new reality for supply chain operations.